Bill shifts cost of relocating utilities to taxpayers

LANSING — A bill that would shift the cost of moving underground lines from utilities to taxpayers is getting traction in the Legislature, despite opposition from the Michigan Department of Transportation and local governments.

House Bill 5016 would require MDOT or local governments to reimburse Internet service providers for the cost of relocating underground lines if the telecommunications companies that own the utilities do not receive sufficient advance notice about construction projects necessitating the lines' temporary or permanent relocations. The bill was discussed, but not voted on, by the House Communications and Technology Committee on Tuesday.

The Telecommunications Association of Michigan, which is pushing for the change, says it will help expand broadband Internet service into areas of Michigan that currently aren't served.

But MDOT, which just wrapped up a long battle to secure additional road funding revenues that the agency and Gov. Rick Snyder said were badly needed, estimates the proposal could cost the state agency more than $60 million a year.

"This goes against a long-standing practice," said MDOT spokesman Jeff Cranson. "Telecoms are basically allowed to use public right-of-way for free. MDOT and local units of government only charge a minimal one-time permit fee to recover administrative costs for reviewing and issuing permits. This bill essentially gives telecoms a property right without just compensation."

Scott Stevenson, president of the Telecommunications Association of Michigan, said many local governments work closely with providers when a relocation is required, but others do not, and a handful can be very expensive to work with.

"Instead of notifying entities within a public right of way that a local unit of government is planning a project that will require relocation — and giving those facility owners time to budget for those projects — the facility owners are often only given a month or two’s notice before the facilities need to be relocated," Stevenson said in an e-mail.

"This lack of timely notice increases costs and delays access to new or upgraded broadband services for Michigan consumers."

John LaMacchia, legislative associate for state affairs for the Michigan Municipal League, said the potential cost impact for local governments is difficult to estimate but could also be significant. Local governments are worried about the precedent such legislation would set and whether gas companies and other utilities would next demand similar treatment.

"We're very concerned about this," LaMacchia told the committee Tuesday. "We have to seriously consider who will be next?"

The bill's primary sponsor, Rep. Eric Leutheuser, R-Hillsdale, said there is similar legislation in Indiana and several other states and "we're not exactly going out in unchartered territory here." Leutheuser introduced a substitute bill Tuesday that he said was designed to address the concerns of local governments by limiting its impact to Internet service provider lines placed in public right-of-ways less than six years before the request to relocate them.

Under the substitute bill, the state and local governments would not be liable for the cost of relocating the utilities provided they gave written notice of the need to relocate at least two years before the relocation is to occur.

But Ed Noyola, deputy director of the County Road Association of Michigan, said the substitute bill represents little if any improvement. Road commissions will included projects in three-year or five-year plans, but can't do detailed engineering until final funding is approved and that's rarely two years in advance of a project, Noyola said.

Local governments can't refuse a utility the right to lay cables in a right-of-way, which are sometimes buried and sometimes attached to poles. But utilities often resist or ignore governments' directions to install them as far from the roadway as possible, to avoid the need for future relocations, because it's more convenient for utilities to work at the edge of a roadway and not have to clear vegetation or face other obstacles, he said.

Rep. Rick Outman, R-Six Lakes, said if utilities didn't follow directions about where in the right-of-way to bury their cables, local governments would not be liable for the cost of relocating those cables.

Lawmakers agreed there is a need for improved communication between governments and utilities about future projects that could force the relocation of utilities.

But lawmakers also expressed concern about emergency repairs which aren't foreseen and for which no notice can be provided.

"This is opening up a Pandora's box," said Rep. Gretchen Driskell, D-Saline.

The committee chairman, Rep. Bradford Jacobsen, R-Oxford, said further amendments to the legislation are being drafted.